Public Service Pensions Bill

Grahame Morris Excerpts

Monday 29th October 2012 Commons Chamber

[Robert Neill]

I take on board my hon. Friend’s point, and we must be realistic in all areas of this discussion. Longevity creates a pressure on the scheme, as well as providing greater life opportunities for people who have retired. It is, in part, a result of greater fitness and better health among the population, which can—among other things—enable people to work for longer. That applies in pretty much every other kind of activity, and we cannot regard any scheme as exempt. I accept, however, that there are particular pressures on firefighters, although I suggest to the House that the Government’s proposals recognise that and provide a sensible and evidence-based mechanism for dealing with it.

[Grahame M. Morris (Easington) (Lab)]

I am grateful for the informed contribution from a former Minister. Does he acknowledge that, besides the pressures of longevity, there are risks in increasing contributions for employees? For the firefighters fund, 7% is the magic figure in terms of opt-out. I understand that a poll by YouGov, commissioned by the Fire Brigades Union, indicates that a larger number—12% —of people are very likely to opt out, and that 25% are likely to opt out when the new contributions come into effect.

[Robert Neill]

When I was a Minister, it was precisely for that reason that I included in the agreement a provision for a review of opt-outs in the firefighters scheme before decisions were taken on increases in years 2 and 3. That was in accordance with the proposals set out by the Chief Secretary to the Treasury. We have built in a mechanism to review that risk, but I hope we will find that it does not materialise. I come back to my point that we must probably move away from our slightly entrenched positions on this issue, and be prepared to look sensibly at how to strike an appropriate balance based on the evidence.

We all want the strongest possible pension schemes for those in our public services. I have referred to the two sectors with which I have been most closely associated, and to which I feel the strongest personal commitment, but one could say similar things about many other sectors. If there is a Division tonight, I would not support the Bill without hesitation if I did not believe that we had put in place a framework that will enable us to deliver on our obligations. There are technical matters to address, but I am confident that we will be able to do so as the legislation proceeds. The Bill deals with an important and necessary reform, and I commend it to the House.

--- Later in debate ---

[Grahame M. Morris (Easington) (Lab)]

In the limited time available, I wish to highlight a particular concern. The Chief Secretary’s contribution seemed to suggest that this is a done deal, and various coalition Members suggested that this is a wonderful Bill with cross-party consensus. I agree with the grave concerns expressed by my hon. Friends the Members for Blaydon (Mr Anderson), for North Ayrshire and Arran (Katy Clark) and for Hayes and Harlington (John McDonnell), not least about the retrospective powers the Bill will give to the Secretary of State without reference to Parliament. In my view, we should have a sensible negotiation on sector-specific schemes, as alluded to by the hon. Member for Bromley and Chislehurst (Robert Neill).

The deal has not been agreed with the firefighters. The key issue for them is normal pension age, which other hon. Members have mentioned, and the proposed increases to the employees’ pension contributions. The Government’s offer published on 24 May 2012 included a commitment to review both the normal pension age for firefighters and firefighters’ contributions. That review is ongoing, and the issue of normal pension age for firefighters is key.

Clause 9 sets a normal pension age of 60 for firefighters in the proposed pension scheme. The NPA is defined in the Bill as

“the earliest age at which the person is entitled to receive benefits under the scheme (without actuarial adjustment) after leaving the service to which the scheme relates”.

This means that, in effect, the Government propose that firefighters should continue to attend house fires, factory and office fires, car accidents, explosions, civil disturbances, terrorist incidents, floods and other emergencies until they are 60 years of age.

At present, nearly 24,000 or two thirds of firefighters in a pension scheme are members of the firefighters pension scheme—the FPS. The normal pension age for those firefighters is 55, with most able to retire in their early 50s. The Fire Brigades Union believes that the proposal is unworkable for firefighters and will destroy the firefighters pension scheme.

This issue goes to the very nature of firefighting. Firefighters perform a number of activities, individually and in teams, such as running, crawling, climbing, lifting, lowering, carrying and hammering. Common activities include ladder lifting and raising, hose running and connection to water supplies, manipulating and operating portable pumps, rescue and evacuation procedures, and wearing breathing apparatus. Worst-case scenarios involve casualty evacuations, search and rescue, operating heavy search equipment, propping and shoring up buildings—as we saw in my area recently during the floods—and carrying equipment over uneven surfaces, which we saw during the dreadful train disaster on the west coast main line.

The public rightly expect the fire service to operate in inherently dangerous situations to save life and property and to render other assistance. The firefighters pension scheme reflects the nature of the job. Firefighters’ work can be

“physically demanding and require sustained effort for long periods, often in arduous conditions”.

It is a career widely recognised as among the most extreme non-military occupations in modern life. I remind the House that currently less than 1% of our firefighters work beyond the age of 55—for good reason. The national pension age of 60 proposed in Lord Hutton’s pension report is for the Government to consider—he did not recommend it as a figure carved in stone—but no evidence was provided to justify it. The Fire Brigades Union has written to him seeking his supporting evidence for it, but as yet it has received no reply.

There are several issues relating to ongoing reports into the merits of a firefighter NPA beyond 55, but the important point, which the hon. Member for Bromley and Chislehurst, the former fire service Minister, referred to is that fundamentally the role of firefighters has not changed. The introduction of IT and changing working practices have fundamentally changed how Members of Parliament and other professions operate, and perhaps have made our lives easier, but that is not the case for firefighters—at least, I can find no evidence for it.

No evidence has been produced to show how firefighters can maintain their health and fitness in order to work safely until they are 60. There are recognised aged-related declines in physical potential. We all suffer from them—well, perhaps you do not, Mr Deputy Speaker, but the rest of us do—and, because firefighting is a physically challenging profession dealing with safety-critical emergencies, such concerns are a matter of life and death for firefighters and the public. Academic papers generally conclude that only elite athletes can maintain well into their 50s the levels of fitness required by the UK fire and rescue service, and the majority of fire and rescue services already have fitness policies in place.

My hon. Friend the Member for Hayes and Harlington referred to the limited opportunities for redeploying firefighters no longer fit for active service. The FBU recently surveyed every fire and rescue brigade to determine what opportunities there were for redeploying firefighters deemed unfit for operational duty on health grounds. In England, fewer than 100 firefighters are in that position, but that is with an NPA of 55. Out of the 46 English fire and rescue services, only five confirmed that they currently had any redeployment opportunities, while the total number of opportunities currently available in the whole of England amounted to 16 posts—and that, remember, is with the normal pension age at 55, so we can imagine how much greater the demand would be if it was 60. I am concerned that such a scenario will end up damaging an essential public service and costing the public purse more.

I referred to studies that the FBU carried out through YouGov. I do not propose to rehearse those points. However, it also engaged the services of an expert actuary to carry out an assessment. It indicated that a considerable number of firefighters would no longer contribute to the scheme. The public will not thank the House or the Government for advocating a pension scheme based on an unworkable NPA and on sacking hard-working firefighters in the years before they can retire after a lifetime of public service.

Higher NPAs could be more expensive. During previous discussions on firefighters’ pensions, the Government Actuary’s Department confirmed that increasing the NPA from 55 to 60 would lead to more ill-health retirements. As I mentioned, the FBU, seeking to quantify that, engaged a specialist firm of actuarial consultants to assess the potential impact of a rise in ill-health retirement under the existing scheme. The evidence shows the substantial cash-flow problems that such contribution increases would create for the sustainability of the scheme. Indeed, the worst-case scenario is that the new pension scheme will prove unworkable and will crash. There is a danger of a significant number of firefighters opting out of the new pension scheme, thereby making it unsustainable for the rest. I believe the Department for Communities and Local Government estimated the savings from the new arrangements at £33 million a year. However, if more than 7% of firefighters opt out—the true figure may well be 12% or more—the likelihood is that those savings will be wiped out, with an even greater cost to the public purse.

Firefighter pensions are rightly seen as part of a social contract with firefighters—men and women who risk their own well-being throughout long careers to help others. I do not believe that the general public will support breaking this well-established covenant, and neither should the Government.